Although projections and expectations grow wilder with every passing day, recently released minutes of the December meeting of the Fed’s Federal Open Market Committee (FOMC) indicate central bank policymakers are not ready to throw caution to the wind.

In the wake of President-elect Trump’s surprise victory and the changed economic outlook his victory seemingly portends, several members of the committee believe rates may need to rise more quickly than currently anticipated to stem a potential buildup of inflationary pressure.

At its December 13-14 meeting, the Fed boosted the benchmark rate by one-quarter of a point to a range of between one-half and three quarters of 1 percent.  At the time the central bankers forecast, but did not commit to, three more such rate increases this year.

Almost all members of the FOMC indicated that the upside risks to their forecasts for economic growth had increased as a result of prospects for more expansionary fiscal policies.  But minutes of the meeting indicate that officials aren’t inclined to arbitrarily take preemptive action by raising rates more aggressively, Cambridge Realty Capital Companies Chairman Jeffrey A. Davis observes.

Not surprisingly, the nation’s central bankers spied some possible negatives that could impact the economy, including the strength of the dollar, financial vulnerabilities in some foreign economies, and the still-low level of the benchmark federal funds rate.   At a press conference, Fed Chair Janet Yellen described the economic outlook as “clouded by uncertainty,” and indicated she is waiting to see what policies are put in place by the new President and how they impact the economy.

“At this point, this is the space most of us find ourselves in,” Mr. Davis said.

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